KDDL Limited

ETHOS Limited
Result Update Presentation
H1 FY17

Safe Harbor
This presentation and the accompanying slides (the Presentation), which has been prepared by KDDL Limited (the Company),
solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any
securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No
offering of securities of the Company will be made except by means of a statutory offering document containing detailed
information about the Company.

This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but
the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth,
accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive
and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any
omission from, this Presentation is expressly excluded.
Certain matters discussed in this Presentation may contain statements regarding the Companys market opportunity and business
prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of
future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These
risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various
international markets, the performance of the industry in India and world-wide, competition, the companys ability to successfully
implement its strategy, the Companys future levels of growth and expansion, technological implementation, changes and
advancements, changes in revenue, income or cash flows, the Companys market preferences and its exposure to market risks, as
well as other risks. The Companys actual results, levels of activity, performance or achievements could differ materially and
adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forwardlooking information contained in this Presentation. Any forward-looking statements and projections made by third parties included
in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and
projections.

Moving up the Value Chain

The Largest & Preferred Retailer of

Swiss Watches in India

Forayed in Watch
Retailing
Started as a Watch
Components Manufacturer

Ethos Strategic Partnerships with Swiss Watch Brands...

Exclusive Retailer for
Corum Watches in India

Ethos alongwith Helios

(retail arm of Titan Ltd)
to be Exclusive Retailers
for Raymond Weil
Watches in India

to create a Powerful Watch Retailing Company in India

4

Ethos is Indias Preferred Destination for Luxury Watches

Ethos to be synonymous with Luxury
watches retailing in India thus gaining
Customer Mind Share

Ethos DNA is all about Authenticity

increasing the Trust factor in a
large Un-organized market

Ethos access to Swiss Watch

Brands will make it a 1 Stop Shop
for Luxury Watches In India

Mind
Share

Trust

1 stop
shop

Online

Knowledge

Ethos makes Swiss Watches

Available Online in a
confluence of Online-Offline
model helping us to leverage the
strength of Swiss Watch Brands
and our wide Distribution Reach

Ethos has well trained

Knowledgeable staff to ensure
highest customer satisfaction and
increasing repeat buying.

PAN Card Regulation : Adapting to Change

With effect from 1st January, 2016, Income Tax department made it mandatory to quote Permanent Account
Number (PAN) for all transactions of amount exceeding Rs. 2 lakh, irrespective of mode of payment.

Refining Product Mix Strategy

Expect longer time to accept

Reducing exposure

Expect gradual acceptance

Maintain lean inventory

Witnessing faster acceptance

Leading to Limited Impact

Outside purview of the

Regulation

PAN Card Regulation : Benefits in the long run

LEVEL PLAYING FIELD

Responsibility of compliance lies on retailer

Leading to a curb on grey practices

CUSTOMER PROFILING

Better profiling as customer are more open to sharing demographic information

Creating tailor-made offering for targeting by segment

Influencing buying behaviour of prospective customers

BETTER SERVICE to EXISTING CUSTOMERS

Proactively and consistently engage with customers

Make Customer feel valued

Asset Light Model...

Focus on
Online
Presence
Rationalize
Store Presence

Expand
catchment
area of offline
store, leading
to higher
revenue

Minimize
Investment

Maximize
Reach

Reduce FrontEnd Cost like

Manpower and
Rental
expenses

Improve
Return On
Capital
Employed

Operating
Leverage
Playing Out
8

P&L H1 FY17
Consolidated*
Rs.Crs

Standalone

Ethos

H1 FY17

H1 FY16

YoY %

H1 FY17

H1 FY16

YoY %

H1 FY17

H1 FY16

YoY %

Revenue

225.9

210.6

7%

65.7

61.3

7%

158.7

148.3

7%

Cost of Goods Sold

138.8

122.9

15.4

13.0

123.4

109.7

Gross Profit

87.1

87.8

50.4

48.2

35.2

38.6

Employee Expenses

31.2

30.9

20.5

18.9

10.2

9.7

Other Expenses

43.2

39.4

18.3

18.4

24.5

22.9

EBITDA

12.8

17.4

11.5

11.0

0.5

6.0

Margin (%)

5.6%

8.3%

17.6%

17.9%

0.3%

4.0%

Other Income

1.2

4.1

1.1

0.9

0.0

0.1

Interest

7.7

8.0

2.9

3.7

4.3

4.0

Depreciation

5.8

5.7

3.4

3.6

2.0

1.8

PBT

0.6

7.7

6.3

4.6

-5.7

0.2

Tax

2.3

0.8

2.2

1.5

0.0

0.1

PAT

-1.7

6.9

4.1

3.0

-5.7

0.1

PAT After MI

-0.6

6.6

NM

4.1

3.0

-5.7

0.1

NM

Cash PAT

5.2

12.4

-58%

7.5

6.6

-3.7

1.9

NM

-1%

* Consolidated Results include Standalone, Ethos Ltd and other subsidiaries

4%

5%

39%

35%

13%

-9%

Consolidated Balance Sheet

Rs. Crs
Shareholders Fund
Share capital
Reserves & Surplus
Minority Interest
Non-current liabilities
Long term borrowings
Deferred Tax Liabilities
Other Long Term Liabilities
Long Term Provisions
Current liabilities
Short term borrowings
Trade Payables
Other current liabilities
Total Liabilities
Non-current assets
Fixed assets
Non Current Investments
Long-term loans and advs.
Other Non Current Assets
Current assets
Inventories
Trade receivables
Cash and bank balances
Short-term loans and advs.
Total Assets
* Consolidated Results include Standalone, Ethos Ltd and other subsidiaries

Sep-16
79
10
69
34
49
39
4
3
4
198
69
86
43

361
102
80
3
19
1
259
195
32
18
14

361

Mar-16
82
10
72
34
43
33
3
3
4
183
68
78
37
342
104
82
1
21
1
237
185
26
12
14
342
10

Ethos Balance Sheet

Rs. Crs
Shareholders Fund
Share Capital
Reserves & Surplus
Non-current liabilities
Long Term borrowings
Long Term Provisions
Current liabilities
Short Term Borrowings
Trade Payables
Other Current liabilities
Short Term Provisions

Sep-16
58
35
23
10
9
1
151
54
76
20
1

Mar-16
57
32
25
11
10
1
140
54
69
16
1

Total Liabilities

219

208

Non-current assets
Fixed Assets
Long Term loans and advs.
Other Current Assets
Deferred Tax Asset
Current assets
Inventories
Trade Receivables
Cash and Bank Balances
Short Term Loans and Advances

26
11
14
1
0
193
174
8
6
6

26
13
13
1
0
182
164
6
6
6

Total Assets

219

208
11

Ethos Performance Trend H1

Growing Revenue (Rs.Crs)

Front-end Rent & Manpower Cost as % of Revenue

+7%

148.3

158.7

15.0%

15.4%

118.1

-33bps

13.5%

91.7

12.6%

12.3%

H1 FY16

H1 FY17

72.5

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

H1 FY13

EBITDA (Rs.Crs)

H1 FY14

H1 FY15

EBITDA Margin (%)

6.0

4.0%

4.2
2.6

3.6%

3.5%

2.6

2.8%

0.5

0.3%

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

Continuously gaining market share despite near term challenges

12

Ethos Online Sales Trend H1

Online Billing (Rs. Crs)

Online as % of Total Billing

+17%

+270bps
55.3

28.4%

47.1

31.1%

22.8%
30.2

15.2%

15.7

7.7%

6.3

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

Visitors on website (000)

+40%
4,946
3,527
2,575
1,314
413

H1 FY13

H1 FY14

H1 FY15

H1 FY16

H1 FY17

13

Ethos Repeat Sales Trend H1

Club ECHO Member Base

Repeat Sales (Rs.Crs)

139,489

32.5
30.5

124,777
23.2
91,705

Mar15

Mar16

Sep16

H1 FY15

H1 FY16

H1 FY17

14

Pan-India Presence with Offline Store Network

Indias Largest retail chain of Luxury
Watches with 38 stores
Ludhiana
Chandigarh
Gurgaon

New Delhi
Noida

3 Duty Paid Retail Outlets at

Domestic Terminals

Bhopal
Ahmedabad
Vadodara
Surat
Mumbai
Thane

Presence across Metros, Tier I, Tier II

cities

Nagpur

2 Duty Free Retail Outlets at

International Terminals

Hyderabad

Bengaluru

Chennai

Maps not to scale. All data, information, and maps are provided "as is" without
warranty or any representation of accuracy, timeliness or completeness

Store Selection Criteria :

Reputed /Pedigree Mall at
Premium location where other
Premium brands present and
having better facility
management

15

Continued Investments in Advertising

Ads in Economic Times

with ETHOS co-branding

16

TRUST CAMPAIGN across channels

to Educate consumers about Watches

to Create Awareness about unscrupulous activities
To Reinforce our ETHOS
17

Company Overview

Business Overview

Scalable
Retail Business ETHOS

Stable
Manufacturing Business

Indias Largest Retail Chain of

Luxury Watch Studios

Leading supplier of premium

watch components - watch
dials and watch hands

70%
30%

Caters to demand from

international brands in
Switzerland & India

Engaged in manufacturing of
of High Precision Stamping
Parts & Precision
CAGR of 8% over FY13 FY16

Authorized retailer of over 60

luxury watch brands, ranging
from Rs. 5,000 to more than
Rs.20,00,000

38 premium watch boutiques

across country
CAGR of 24% over FY13 FY16
72.55% subsidiary of KDDL
Ltd on a fully diluted basis

*Figures updated as on date

19

Expanding Precision Engineering Business...

Setting up Greenfield
Facility at Bengaluru,
Karnataka

Investing Rs. 25 Crs

over 2 years with
2:1 debt funding

Manufacture high quality precision

stamped components, progressive tools
and sub-assemblies to cater to highgrowth high margin industries

~2 acre land allotted

in EOU zone near
Bengaluru Airport

Expected to
commence operations
by FY17 end

Building New capabilities

Injection Molding
CNC Machining
Plating

Financial Closure has

been achieved & project
is proceeding as per
schedule

to emerge as Strong Player in Organized space

20

Stable Manufacturing Performance

Revenue (Rs.Crs)

EBITDA (Rs.Crs)

CAGR + 8%

CAGR + 19%

128
111

121

30
19%

96

25
20

20%

23%
19%
18%

26
13%

23
21

13%

15

8%
10

12
3%

5
-

FY13

FY14

FY15

FY16

-2%

FY13

FY14

FY15

FY16

21

Scaling-Up Retail Performance

Increasing Online Revenue...

... Improved Absorption of Fixed Expenses

Rs. Crs

9.6%
101

10.0%

9.6%

18.0%

8.9%

9.0%

68

36

8.0%

16.0%

7.0%

17
17.3%

157

184

213

228

17.9%

7.0%

16.9%

14.0%

16.1%

6.0%

12.0%
FY13

FY14

Offline

FY15

Online

FY16

5.0%

FY13

FY14

FY15

FY16

Front End expenses as % of Sales

EBITDA Margin before Central Expenses
22

Contact

For further information, please contact:

Company :

Investor Relations Advisors :

KDDL Limited
CIN : L33302HP1981PLC008123

Strategic Growth Advisors Pvt. Ltd.

CIN : U74140MH2010PTC204285

Mr. C. Raja Sekhar

rajasekhar@ethoswatches.com

Mr. Shogun Jain/ Ms. Payal Dave

+91 7738377756 / +91 9819916314
shogun.jain@sgapl.net / payal.dave@sgapl.net

www.kddl.com / www.ethoswatches.com

www.sgapl.net

23